Advertiser Disclosure

How to Start a Business If You Have Student Loan Debt

Blog Author ProfilePeppyWallet Editorial Team
Posted on September 12, 2019
PeppyWallet aims to help you make the best financial decisions when it's time to make them. In order to help maintain our platform and services, some or all of the products featured in this post are from our Product Partners. Our opinions however, are our own, and featuring specific products does not influence our analysis.
Editorial Note: This content is neither commissioned nor provided by any financial institution. Any analyses, reviews, opinions, or recommendations that are expressed in this article are those of the author's alone, and may not have been approved, endorsed or reviewed by the financial institution(s) mentioned in this post.

Many Americans dream of starting a business, and you probably know someone who has done it. Starting a business is hard work, and we don't need to tell you that. In fact, approximately half of first time business owners will end up closing their doors after 4 years of a commitment.

Strategizing to grow your business and keeping up with your competitors is tough, and it can be even more stressful if you have student loans to worry about. If you're in the spot to raise capital for your business, you could also end up being turned down due to your student loan burden.

Considering 44 million Americans have student loans which make up our country's $1.5 Trillion student debt problem, the good news is that there's more student borrowers who try to create their own business than you think, so there's multiple tried and tested ways you can try out even if you're personally burdened with student loans.

You would want to understand all your options when executing your strategy as a business owner, so it's equally as important to understand some of the options you have for battling your personal student loans while running a successful business, so keep reading for our helpful tips below.

1. Raise capital from people you know

You can choose to not go with a traditional business lender if you've applied to some in the past and have been rejected.

Just as you would first look to family and friends for a co-signer if you were refinancing your student loans, try to raise seed capital from friends you know or close family members before you begin submitting formal applications to take out a business loan.

2. Tap into crowdfunding opportunities

If you're past the stage where you can ask friends and family for seed capital, try looking into online lending platforms and marketplaces such as Funding Circle, a peer-to-peer lending marketplace which allows investors to lend money directly to your small or medium-sized business.

In fact, Funding Circle was the first marketplace to use the process of peer-to-peer lending for business funding in the UK, and now operates in the UK, US, Germany and the Netherlands, so outside financing is available to individuals who also live outside the U.S.

3. Seek deferment

Deferring your student loans may be an option with your provider. If you have federal student loans, a deferment will allow you to cease making your scheduled federal student loan payments on a temporary basis. If you meet certain requirements and you can qualify for a deferment, it might make sense to defer your payments if you need the extra capital immediately to finance your business.

If your student loans are serviced with a private lender, you might be able to defer your loans if you get in touch with your servicer. In some instances, deferring your loans and resuming payments might be as simple as clicking a button, but keep in mind that the total interest on your student loan will increase when you start the loan deferral period.

4. Look into refinancing your student loans

Refinancing your student loans could help take out a good chunk in interest from your overall price on the loan and reduce your monthly loan payment. With the current macro environment still settling with record-low interest rates, many borrowers may be able to benefit by refinancing their student debt, especially if it was originated at a high interest rate.

Student loan refinancing also doesn't have any fees, as with refinancing of other debt, so it makes even more sense to take into serious consideration. Be sure to read our thorough 18-step guide before you start applying to private lenders to refinance your student loans, since refinancing your student loans may save you more money over the long run than refinancing something simple such as your car, so it also requires more due diligence up front.

5. Maintain a consistent payment history

Your overall credit payment history accounts for approximately 35% of your credit score, with your recent history naturally having a higher weight than your older history. If you missed a payment several years ago but you've paid on time since that single missed payment, your credit score will most likely have recovered.

Make sure you consistently keep up with your current student loan payments as having a single missed payment can reduce the chances of receiving external financing for your business.

Here are some of the best refinance lenders

Variable APR

1Important Disclosures for Earnest

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest's fixed rate loan rates range from 2.98% APR (with autopay) to 5.89% APR (with autopay). Variable rate loan rates range from 1.99% APR (with autopay) to 5.74% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 7, 2020 and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 12/7/20. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2Important Disclosures for CommonBond

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.

3Important Disclosures for LendKey

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any education institution. Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810. As of 12/07/2020 student loan refinancing rates range from 1.99% to 8.56% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.

The team members at PeppyWallet pride themselves in finding and suggesting services and products that they believe are of high quality and have the potential to positively change a student loan borrower's financial circumstances. We may earn an advertising fee or sales commission when we recommend various services and products to you, which is how we maintain our site and education platform. Be sure to read the fine print to help you understand your product's or service's terms and conditions. PeppyWallet is not an investment advisor or lender, and is not involved in the investment or loan approval process, and does not make investment related or credit decisions. Any terms and rates which are listed on our website are our latest estimates but are subject to change at any time, and we cannot guarantee that they are up-to-date.